• The US Dollar trades steady against most major currencies on Tuesday. 
• Traders await Wednesday’s Fed decision, with limited reaction expected from the Retail Sales data. 
• The US Dollar Index is under selling pressure near the yearly lows ahead of the central bank key event. 

The US Dollar (USD) trades flat on Tuesday, with traders sitting on their hands ahead of Wednesday’s main event. The Federal Open Market Committee (FOMC) convenes on Tuesday to debate the upcoming US Federal Reserve’s (Fed) policy decision on Wednesday and how big the initial Fed’s interest rate cut will be. Then, the markets will finally hear from Fed Chairman Jerome Powell at the press conference. 

On the economic data front, the Retail Sales are due on Tuesday. Although it is normally very market-moving, expect the reaction to be somewhat subdued, with traders waiting for the Fed meeting outcome before piling into a trade. The only scenario in which a substantial move could happen is if the Retail Sales contracted in August, which would support the case for the Fed to deliver a bigger 0.50% rate cut.